For-Profit education stocks are continuing momentum seen yesterday afternoon as gainful employment rules are seen as much less onerous than expected.

Deutsche Bank notes that the effective date where schools lose Title IV eligibility is now really July 2016 and schools now have to fail all 3 tests for 3 years out of 4 to lose eligibility, versus one strike early.

On Pell grant issues, the firm notes, "since most programs will pass the 35% repayment rate threshold, future cuts to Pell Grants are now less of an issue. As of yet, no word on 90/10, but again schools can now raise tuition if need be due to likely repayment rate compliance."

Commenting on expected stock reactions, analysts at Deutsche Bank said: "It's hard to calculate how much the stocks may be up tomorrow, but we assume most stocks should trend towards 11-14x consensus '11E EPS, which is where many stocks with no expected regulatory earnings reset are already trading (DV, CPLA, LOPE, UTI). Stocks that rise the most tomorrow are likely the ones that are cheapest on consensus CY11E EPS like ESI, COCO etc. These stocks could be up 15% to 35%, in our view. Due to already strong repayment rates, or higher cons. PE multiples, APEI, DV and APOL are likely to rally less than avg. The full rule is out at 7am Thurs; so far we have only seen the press release and slide deck."